Take away my computer, my software, and every and any other financial tool available to me and leave me with nothing except a stack of blank paper and a pen and I will still be able to win financially.

I would take that pen and craft a weapon fit for wielding against any of my financial enemies (temptations of easy money, the procrastination of retirement savings, the allure of a flat-screen TV mounted on a wall connected to a Nintendo Wii — for bonding time with the boys, among other things).

That mighty weapon would look a little something like this. Time invested: 25 seconds:

I would diligently record every single purchase I made. Every time money flowed out of my life there’d be a record of it. I would not just record the “significant” purchases because I would know that every single purchase is significant. It’s the aggregate of all your financial decisions that matters most, and every time you spend money, you’ve made a financial decision.

Once my paper was full, I would write down the beginning and end date at the bottom and total the spending. I would then create another similar weapon and follow the same process. I would write down everything I spent. Every time.

This little exercise, occupying perhaps one hour of my time each week would plant a seed of awareness inside my brain with the potential to grow into a mighty oak of financial prowess. It would only take a bit of nurturing and protection.

Software Can Destroy Awareness
Why are financial tools a potential threat to your finances? Because they quickly desire to move in the direction of the software doing more so you can do less. Less doing means less awareness, and less awareness means your progress will be slowed tremendously. As a software developer, I’m keen on giving customers what they want. They’re happy and tell their friends about the software, which in turn makes me happy. The merry cycle continues. However, where I see a potentially new feature threatening the users’ awareness of their financial decisions you will find me kicking, screaming and dragging my feet.

I dragged my feet when it came to software importing transactions. I was wrong on that one (though the slope is slippery). I’m dragging my feet with auto-categorization of imported transactions. Time will only tell with that one. I refuse to offer the ability to let users set one budget for the year. I want users to revisit their budget often — very often. I’m vehemently opposed to software automatically linking with banks and syncing transactions for you whenever you want if that software purports to help you spend less money and make wiser financial decisions. It may do that to a degree. But its impact is weakened substantially.

Banks Work Hard to Destroy Your Awareness
Banks have worked hard to destroy our awareness. That seed that you plant when you start to become aware of your financial decisions is fragile and exposed to external forces that want so bad to destroy it. Banks have been extremely successful in selling us on swiping instead of digging into our wallet and counting (don’t underestimate the counting that used to be required when you spent money). How do we fight back? We go home and go through the psychological process on our own, recording exactly how much we spent and why we spent it.

Automatic billpay is a great time saver and I’m a big fan. But I only remain a fan because I go through each of my financial decisions several times per week and record how much I spent, and why I spent it. I fight back. I protect my awareness.

When you Let Awareness Do Its Thing
When you actively nurture that seed of awareness, ensuring that you’re recording every financial decision you make, the seed will eventually grow into a mighty oak, immovable by any force (regardless of the offer, OAC of course..[written with searing sarcasm]).

That might oak will represent your core values. Marketing can’t change them. Social situations can’t change them. Friends can’t change them. They are your core values.

The natural extension of my paper-turned-weapon would be to begin to plan what I would like to do with my money before I spend it. Recognizing a balance between cost (time) and benefit, the planning should happen at least monthly and more frequently if you derive measurable benefit from that. That planning is called budgeting. Forget all of your preconceived notions about budgeting being restrictive, for tightwads, or something only businesses need to do (the logical hole in that last excuse? Big enough to drive a Mack truck through). A budget is a plan. Heck, it’s your plan, so why the beef?

As you write down your spending diligently, you will desire to change things. It won’t be because someone’s breathing down your neck telling you to stop going to the mall so often. It won’t be from some uncomfortable outward pressure. It will come from inside — from your core actually. Your core values will slowly begin to speak to your mind again. Your common sense will emerge from its hiding place. The cobwebs of financial confusion will slowly disappear and you’ll have financial clarity.

Notice here I said clarity. I did not say peace. I did not say bliss. I said clarity — the close cousin of reality. For too long you’ve been muffling the voice of your core values and ignoring the pleas of your innate common sense. You’ve earned and spent and earned and spent, walking on a treadmill leading absolutely nowhere. Now that you’ve increased your awareness, those core values and common sense aren’t quite so afraid to speak up again. They’re anxiously awaiting an opportunity.

That opportunity for your core values to speak is during the planning process. You sit down with the clarity that you now possess, with Common Sense sitting on your shoulder, and assess your situation. Through the lens of clarity you now see things as they really are. You now see reality. Inside reality you’ll find you make the absolute best decisions. You may decide you can put off the desire for X and Y, so you can focus more on paying off all of the past desires of A through W. You may, through that lens of clarity, receiving whispers from your common sense, and feeling your core values (finally) actively participating, realize that your financial future is actually in your hands. Goals will begin to crystallize and you’ll feel that you’re headed in the right direction.

It’s important to realize, once again, that being headed in the right direction is not the same thing as being in the right place. You may have taken a long detour through La La Land before you finally realized that what you were doing wasn’t working. Take comfort in knowing that you’re correcting course and going where you want to go. The beauty of the whole situation is that you will feel content with your situation. Money may still be tight, health problems may still strike, prices may still go up, but you will be operating from your core values and you will be content.

All of this from persevering with a pen, a paper, and a plan.

Not only is my wife a phenomenal cook, she’s also a phenomenal grocery bargain shopper. After a lot of nagging, pushing, prodding, and begging, I finally convinced her to write a small article about how to keep your grocery bill consistently low. Her take on bargain grocery shopping:

Julie: Well, the first thing with bargain shopping is to know what groceries your family eats and enjoys. If your apples always go bad, there is no reason to buy a lot of apples just because they are on sale. You end up losing money even if they were a really good deal. So, once you have a list of things you know your family enjoys you can keep a look-out for those items in the grocery stores weekly circular.

The next step is really knowing what constitutes a “good deal.” If you have a list of those things you know you and your family enjoy and would really eat, then those are the first things you should take note of in the weekly circular. It will only take a few weeks for you to get a really good idea of what good prices in your area for the various different items you buy regularly.

Another way to save money when grocery shopping is to plan meals around those items that are on sale. Make a list of those things on sale, then go through your recipes and cookbooks to find recipes using those items. You can and should of course, stock up on those things you know you use frequently (just maybe not that week) and are on sale that week. At the same time, you should keep in mind that things will go on sale again and not to be too excessive in your stocking up.

Once you know what things you would like to buy and know what price is a good deal, you can make a comprehensive list of all those things on sale and their prices. To make things a lot easier, I generally take this list and price match everything at Wal-Mart. I know many of you may think Wal-Mart already has the absolute lowest prices on EVERYTHING, but one week of this and you will think otherwise. Wal-Mart is the cheapest on many items on my list, but I have save hundred of dollars on items where they are not the cheapest at all. Generally I have found they are the cheapest on pasta, a lot of canned goods, generic sauces, frozen fruit, cereals, and a lot of convenience items. However, a sale at another store on these same things can occasionally beat their prices. On the same token, there are still groceries at Wal-Mart that are almost always cheaper somewhere else, so you just have to be aware and learn. You can also choose to go to the stores individually that have the sale items you would like. Sometimes that might be more convenient if you live nearby several grocery stores or would prefer not to make one really long trip to Wal-Mart.

That’s pretty much bargain grocery shopping in a nutshell. Learn what you buy, figure out a “good deal” on those items, plan around the sale items, and don’t think Wal-Mart is the cheapest for everything.

As many readers probably already know, we’re now a “working” family and no longer part of the student life that we grew to love over the past several years. I’ve recently written about the change to expenses that can happen with income rising even a little bit. In light of this phenomenon of expenses following income, it becomes extremely important to implement the “Automatic Millionaire” strategy made popular by David Bach.

I would like to get out in the open that Bach says budgeting isn’t necessary. While you can get by without a budget, you’re many, many times better off using one in conjunction with disciplined saving strategies. I think he does a disservice to people for not letting them know that they need a budget.

He is right on the money regarding the automatic millionaire principle. Just not budgeting. Ahh, that feels better already.

While I was in school, my main focus was to avoid debt at all costs. I didn’t want to graduate with a ball and chain. And I certainly didn’t want someone to have dibs on my money before me (Isn’t that what debt comes down to? Who gets first dibs?) I knew I would finish up my degree at 25 and 1/2 years old, and that I would have a job. (The nice thing about accounting is that you get a job when you graduate. That’s where the ‘nice’ part ends.) With that job would finally come the coveted salary.

Starting accountants don’t make a lot of money. That’s no secret. But fresh college graduates who have been miserly up to this point certainly can feel a bit of entitlement fever coming on. I’ve certainly felt it. The rationale is pretty easy: “I’ve scrimped and saved all of these years. I put myself through school. I worked the entire time. I never did anything fun. I’ve been depriving myself. I deserve [fill in want here].” Like I said before. I’m certainly guilty of it at times.

All throughout school I had read books on the side about personal finance. It’s certainly (obviously) a hobby of mine. Once this site started to pick up a little bit I naturally felt the desire and need to read more. One of the things I consistently read is that it’s better to start early with retirement investing. That’s a no-brainer. I won’t bother showing you the exponential trend line that can be yours if you begin investing at the age of seven…

But at any rate, the knowledge is there for me. I know it’s the early bird that gets the nest egg. Or however that goes.

However, with my anti-debt intensity throughout school, that was my real focus. I avoided debt 100% and snagged that degree. I really didn’t put anything away toward retirement during those college years. I just focused on avoiding that debt. I knew that 25 and 1/2 would still be early enough.

And then, we moved. To a nicer place. We now have another car. Our new social circle is used to doing things a bit more expensive than brownies and a game of cards. Other expenses have risen along with income. It’s a strange and very powerful phenomenon.

And frankly, it kind of scared me.

It scared me enough to realize that the first thing I needed to do was go to my trusty Vanguard and set up automatic deductions twice a month to fully fund the Roth IRAs. It also scared me enough to realize that I needed to make sure I was maxing out my 401(k) contribution up to the employer match (read: free money).

And now, I’m not so scared.

David Bach has this automatic millionaire bandwagon going at a pretty good clip and I’m going to jump on for the automatic ride to automatic millions.

It’s interesting to see how this panned out. For years I had been saying no to retirement savings (in a regular, big way) because I was so focused on staying out of debt during school (also a worthy goal). And then, when it came right down to the wire, where I actually had to start acting on my knowledge, it wasn’t quite as easy as I thought it would be. And I love this stuff!

YNAB fits into this equation quite easily. Each month as you sit down for your Budget Meeting, you’re going to want to make sure, first and foremost, you pay yourself. You budget that money away and never think about it again. It’s working toward your future!

I don’t believe a budget stops when you’re running your savings on autopilot though. Just because you’re obviously living within your means does not mean you aren’t missing out on opportunities to maximize your dollars by minimzing your expenses. A sound budget will help you prioritize your money to be in line with your values. So even when money is tight, you will be content because your money will be doing the things that are important to you — instead of doing things that society and advertisers tell you are important.

Bach had a great idea in writing the Automatic Millionaire. The idea to just set aside some money, out of sight out of mind, is a sound one. It will protect you from your knowledgeable self.

Now I’m not setting out here to write this little bit and make anyone feel dumb. Well, not really. This is really more of a confession because man did I do a bunch of dumb things during this past week. In order to save at least a little bit of face, I’ll just highlight a few. Hopefully though, my point will be driven home.

If you haven’t yet read about our recent moving drama, that can give you a sense into what exactly happened — the original bit of snow for my Dumb Snowball.

You’ve probably also heard of the debt snowball by now, where you pay only the minimums on everything but your target debt. When the target debt is paid off, you apply its minimums and any extra you were applying toward target debt number two. You repeat that “snowballing” process until all of your debts are paid off. The secret, of course, is intensity.

Well, this last week I discovered the “Dumb” Snowball. Basically, one thing happens to knock you financially off-balance, and the snowball effect kicks in where you proceed to do one dumb thing after another.

Last Monday our trusty Chevy Prizm died. And thus began my series of dumb mistakes. Being somewhat worried, having my wife and two little boys on the side of the road, I failed to remember that we have roadside service. We pay for that just in case things like this happen. Well, the tow truck cost $200. We can probably get that reimbursed through our insurance, but until we do, we’re out $200.

We rented our car from the airport where they have huge fees. There was one rental company that would let me do a long-distance drive with a car not from the airport but they were a few dollars more expensive. I chose the airport location at a rate of $80 a day. That wasn’t so bad. The mistake came when we failed to switch that car for a cheaper one for several days. That mistake alone probably cost us $150.

I forgot to fill up the $80/day rental before returning it. That cost us $40.

To add insult to injury, there is a gas station literally 30 seconds from the rental drop-off location.

Because I chose to save a few dollars and went with an airport rental I (1) had a harder time getting to the DFW airport to make the switch to a cheaper car and (2) still had to rent from the airport again (with their huge taxes) once I did get the cheaper car. That meant I was paying more and had to drive back to the airport to finally drop it off.

I guess this is more than just a few of my mistakes (but certainly not all of them). These all took place in less than a week.

There are two things that really scare me about the position we were in. I wasn’t worried about us financially because of our emergency fund (for just these types of situations) but I was worried about these two other things:

1. First, it seems that spending breeds spending. Once we forked over the $200 for towing, I noticed a change in my thinking about money. It seems that being in “Emergency Fund” mode gave me a license to spend (case in point, we went to Applebee’s that night instead of to Wal-mart for some food. And we don’t even like Applebee’s.) Being in the eye of an Emergency storm does not give you license to throw all well-groomed spending habits out the window. It was happening though. My wife and I could both feel it.
2. Second, and this is actually much scarier (and more expensive) is the Dumb Snowball. I don’t know what it is, but it seems that these crises seem to keep us from remembering even the easy things (fill up the rental before returning it, don’t forget the gate opener for the apartment complex in the rental that will require a $60 fee if you lose it — we’re trying to get it back). This snowball effect is costly! What was even more worrisome for me was that we were needing to purchase two cars in just this type of mode. We came to grips with the fact that we were paying through the nose daily for our rental, and took our time getting what we feel was a good deal on the cars.

Being in these situations is scary though! Psychologically, you feel as if your financial house is tumbling down around you. Little do you realize that the large bulk of that feeling is purely a figment of your imagination, that things will work out, and that you’ll come out smarter and more savvy. A bit more ready for the next crises.

In the thick of an emergency event? Take a few deep breaths. Go for a run. Lift a few weights. And above all, don’t succumb to the Dumb Snowball. It’s a costly ride!

A few years ago I wrote about some of the practical aspects of living within your means. The gist of the article: if you want to successfully live within your means over the long term, you need to have some sort of system in place to record, track, monitor, and evaluate your spending. With whichever system you choose, consistency in the execution is paramount to your success.

Being a budgeting aficionado, it’s no wonder I think a system is necessary to live within your means. But today my focus is not going to be on the how, but on the why. I hope to open your eyes to a benefit of living within your means that is sometimes overshadowed by the ‘How’ of the principle. It’s a huge benefit. Perhaps infinitely huge.

Forgive the shallow talk of getting rich for the next few minutes, but that is basically going to be the benefit I’ll be talking about. We’re just going to get at it from a different angle.

No — I’m not going to talk about how living within your means enables you to invest the difference in well-selected mutual funds and how, over time, the compounding of those investments will make you a millionaire (perhaps a few times over). We’re going to talk about risk. Risk is a rich man’s best friend, and the enemy of anyone living paycheck to paycheck

Why the Rich Stay Rich (and Get Richer)
I’m sure you’ve heard it often enough. The rich are privy to secret investments, inside networks of private businesses needing equity infusions, IPOs for only the accredited, sweet real estate deals, lucrative side partnerships, yada yada, etc. and blah blah.

Some people are bitter about the opportunities that apparently present themselves to the rich, other people only envious. I don’t want to take any position here except the position that opportunities to earn more money do indeed present themselves.

Consider the well-to-do person that is presented with an opportunity to invest $10,000 in a very small, private startup company. The person could very well lose their $10,000. They could also turn that $10,000 into $200,000 in a matter of five years. The person takes the plunge, writes the check, and invests the $10,000. Do they lose sleep at night because they have $10,000 of equity in some shaky startup? Not hardly. Why? Because they can afford the risk.

Consider the person that is not living within their means. $10,000 to invest is a dream to them and nothing more. If they did have the $10,000 they certainly could not afford to risk it on something as shaky as a startup company.

However, if this second person cinched up the belt, got a budget, and gave him or herself a bit of breathing room, would a $1,000 investment in something seem so unbearable? Probably not. Could they afford a $1,000 loss if worse came to worse? Probably so.

I Can’t Afford That
A few years ago in my corporate finance class we talked about risk. Actually, we talked about it pretty much every day. The rule is that the return you require on your money invested should be equal to the risk you’re taking when you invest. While there are a few people that are risk-seekers, others risk-avoiders, the core principle is the same. Where there is low risk, there is low reward. Where there is high risk, there is high reward.

The rich can afford to take on higher-risk projects, which gives them the opportunity for higher reward. Those living above their means, with no (or even negative) disposable income, cannot afford high-risk investments. As a result, they’re immediately disqualified from high returns (we’re talking about the norm here, not the exceptions to this rule). And if you can never “afford” to invest, you’ll never be rich.

The trick is to get to that disposable income I’ve mentioned a few times. And begin investing.

While I’m not a Rich Dad, Poor Dad diehard, I did appreciate Kiyosaki’s push to begin thinking a little bit differently about money. This is one of those ways.

I’m not saying you’re going to suddenly become privy to new investment opportunities just because you now have some disposable income. What I am saying is that without disposable income, you cannot take advantage of any opportunities that may roll your way. And that would be a shame.

It’s the Famous Debt Snowball…in Reverse
Perhaps it will take a few years before something comes up in which you feel you could invest your disposable income. Perhaps you’ll keep things simple and invest purely in index funds until another erm, more flavorful, opportunity comes along. But you can rest assured that the opportunity will come.

And maybe I’ve been indoctrinated by optimistics (the class was called “Entrepreneurial Perspective” and every week a different “normal” speaker would come and tell the class how they made it big. The opportunities ranged from hair salons, to time organizers, to multi-family apartment buildings), but is there really any healthier way to be?

What will happen once you seize the opportunity to invest in a local hair salon? You’ll probably need tax advice. You’ll hire an accountant. A few years later your accountant gives you a call because he has a client that’s looking to market an invention and needs some equity partners. You’ve grown to trust your accountant, so you take a look at the opportunity. One of the other investors in this invention does a lot of residential real estate development and is wondering if you want to invest in a new duplex he’s looking to build…

Of course I’m making this up, but the principle I’m trying to illustrate is this reverse snowball effect. Opportunities beget even more opportunities and after several years of waiting, saving, evaluating, and networking, you’ll have more than you can even possibly look at.

The rich stay rich because they consistently find opportunities to invest their (large amounts of) disposable income. And I am saying that you can become rich by creating disposable income and searching for opportunities in which to invest it.

That is the benefit of living within your means. If you don’t do it, your opportunities are severely limited.

One of the often overlooked values of budgeting is the Power found in planned purchasing. There are a few different ways you can look at this Power, and a myth I would like to debunk.

Planned purchasing will help you:

• make smarter buying decisions
• avoid impulse spending
• be rid of guilt when spending

Make smarter buying decisions
What my wife and I have noticed ever since we began actively (not intensively, we’re talking 2 hours per month) budgeting is that we make smarter buying decisions. We are more alert, attentive, creative, disciplined, hard-nosed, prone to negotiating, meaner, and leaner when it comes to giving anyone our hard-earned, hard-working money.

At the beginning of the month, when you sit down together, you simply decide what your dollars are going to do. Within those 15-30 minutes you will also began scheming and dreaming on how you will maximize your dollars work effort. You budgeted $300 for groceries? Well how the heck can we get every dollar of those three hundred to go the distance?

“Jesse, please don’t throw away the weekly ads. I need those so I can plan what we’re going to have for dinner,” my wife might say.

“Man, our electricity bill was pretty high last month. Let’s see if we can’t remember to turn off all the lights.”

“We need to drive to the airport twice this month, we have that wedding that’s two hours away, and Grandma wanted us to bring the baby for a visit. Gas is going to be out of this world! I can call my friend and see if we can’t carpool to offset some of the cost.”

“The baby needs some new shirts. Let’s keep your eyes peeled for any garage sale signs this weekend while we’re out.”

And so it goes. What might have happened? I throw away the ads. Julie ends up spending more than necessary. We don’t acknowledge the increase in electricity and simply chalk it up to a “woe is us” type of attitude. We get nailed in gas for the month and could have totally avoided it. We pay full price for shirts that will be useless in six months (or until another one comes along at least.)

When you plan your purchases you think, plan, strategize and maximize your dollar.

Avoid impulse spending
When a plan is in place you have a reason not to go off and blow some money on an emotional whim. If you have no plan, there is no reason. And when there is no reason, there is no motivation. Without motivation, there is no A C T I O N!

Let’s face it. We’ve all been there. We’re depressed, exuberant, lonely, excited, happy, sad - whatever - so we want to spend some money. Or maybe you’re out grocery shopping (with your list even) and you see some Ben & Jerry’s ice cream. It wasn’t part of the plan. It’s much easier (I’m not going to say it’s easy) to walk away. Not part of the plan man.

A plan is a roadmap to a goal. Your goal (perhaps New Year’s Resolution) may be to get out of debt, save for a downpayment (a big one) on a home, invest more for retirement, help your children with college, etc. It’s not nearly as important exactly what type of goal it is. It’s important that you have one. And to reach that goal, a plan is absolutely necessary.

Be rid of guilt when spending
Did you plan to buy a portable DVD player this month? Great! Do it! Rest assured that a planned purchase is usually a reasonable purchase because of the thought, time, effort, strategizing, etc. mentioned above. Please don’t feel bad if you’re spending planned money!

As a matter of fact, there’s nothing that feels quite as good as going out to eat to a really nice restaurant where you know going in that you can order pretty much whatever you want on the menu. Want to be daring and get a soda? Go for it Want dessert? Maybe two? Sure. How about an appetizer? Of course.

Guys: while you were budgeting at the beginning of the month, did you not exert all negotiating skills in your power to make sure your wife was on board with the fact that you needed a new drill set?

Ladies: while you were budgeting at the beginning of the month, did you not exert all influence in your power to make sure your husband was on board with the fact that you needed a new outfit (shoes are part of the outfit)?

Then promise me that when you actually purchase these (or some other things w/o the stereotype) that you will not feel guilty doing so. The Power of planned purchasing is that you agreed with yourself, or agreed with your spouse if you’re married, on what you would be buying. The power of a zero-based budget is that you are faced with the fact that you have limited resources and cannot consider debt as a viable way of increasing your resources (it does just the opposite). With the zero-based budgeting principle firm in your minds, these fun purchases can be a part of your money life. They should be.

I’m spontaneous. Budgeting ruins that.
I’ll admit that as soon as you plan to purchase something, it no longer can fall under the term spontaneous. However - can’t you plan for spontaneity? I’m not saying you plan for every purchase, I’m saying that you plan for the fact that you aren’t going to plan for every purchase - that you will be spontaneous.

So just estimate it. When you’re budgeting at the beginning of the month, give yourself a bit of room in the “Miscellaneous” category or “Fun Money” category. Heck, make a “Spontaneous” category if you want. If you don’t have a lot of “room” in your budget, then you don’t have a lot of room for spontaneous purchases and will need to face that reality. If you have a bit more room, you can afford some spontaneous splurges.

The deal is this though. Planning your purchases at the beginning of the month makes your money work harder. You will see your money S T R E T C H to do what it needs to do. It’s almost magical. It’s powerful. It works.

Take ACTION!

You read that correctly. In order to use YNAB (and to be in compliance with Rule #1 of YNAB), you will need to save one month’s expenses. The typical response?

How the heck can I do that? I can barely make ends meet as it is!

It may seem that way to start, but I’m going to provide you with a few money saving ideas (also, some money earning ideas) that will get you to your one month’s expenses in no time.

Easy Money Saving Ideas - Implementation however…
Alright, let’s get one thing right out in the open: this is not going to be easy. You’re going to really have to get radical in order to pull this off effectively. You cannot expect to reach a whole month’s worth of expenses (your #1 Fund I like to call it) by just haphazardly putting money away now and again. No way - no how. You need to get INTENSE in your desire to stop living paycheck to paycheck and reach deep down inside your soul for some major resolve.

You’re about to do what 70% of Americans cannot manage to do. Live below their means, save for a rainy day, and get out of the paycheck to paycheck cycle.

I’m providing these money saving ideas for you to implement not mull over! You must ACT on these ideas! ACT!

A List of Ideas to Save (or Earn) Money
1. Work overtime. If your job allows it, put in as many hours as you possibly can until you get your #1 fund. Remember, this is a temporary fix for a long-lasting solution (no longer living paycheck to paycheck). You may see a bit less of your family for a short time - but that’s okay. What you’re doing for your family in terms of getting your finances in order has a much more profound and far-reaching impact.
2. Get a part-time job. You can make a thousand bucks a month delivering pizzas. Do that for three or four months and you’ll have your #1 fund. Be diligent and have a smile on your face (more tips)! Check out possible temp jobs, graveyard shifts, UPS, etc.
3. Start a small business. Some people laugh when I share this idea with them. I don’t say it to be funny. I have a cousin that built up a lawn care business in one summer. It’s been a couple of years since he’s put anything into it, and it still makes him money every month. Imagine what it could be doing if he was actively going after it? If you mow 8 lawns for 8 weekends at $20 a pop you’ll have a nice stash. Don’t forget car washing, window washing, dog walking, etc.
4. Have a garage sale. That’s right - get rid of the junk you don’t need but think you might. Sell everything you forgot you had. People sometimes make enough from their garage sale to save some major money toward their #1 fund. Typically you make between $500 and $800.
5. Ebay. Like a garage sale, but with a wider audience. If you don’t know how to ebay, ask the person next to you. They’ll most likely know how and will be able to help you.
6. Car pool. Gas prices are high right now. Sure it might be a bit inconvenient, but imagine if you could cut your gas bill in half!?
7. Brown bag it. Don’t eat out - at all. Remember, a short-term solution for long-lasting blessings. Sacrifice. (You’ll probably trim down a bit too - I know I tend to trim up if I eat out a lot).
8. Cash in vacation. Sacrifice a few vacation days for your peace of mind. Many employers will allow you to ‘cash out’ of vacation. It’s a great way to get some cash.
9. Save all windfalls. You do get windfalls. They happen. Stash ‘em.
10. Stop contributing to your retirement. Here’s where I usually get a bit of backlash from people. You are talking to a guy that knows the value of an invested dollar. Trust me. But remember, these money saving ideas are not long-lasting, permanent changes you make to your finances. They are short-term ‘bursts’ of financial feistiness that will get you to your #1 fund that much faster. Once your fund is in place, you can immediately begin contributing toward retirement. Email me if you have a question about this.
11. Cut your phone bill. Consider cutting your phone down to the very basics. Do you have a cellphone where you could get out of the contract inexpensively? Remember, short-term solution for long-lasting peace.
12. Dont’ buy bottled water. Seriously.
13. Don’t go to the mall. Seriously.
14. Cancel cable, satellite, etc. Seriously.

These money saving ideas will get you toward your #1 fund faster than you can truly appreciate until you have actually lived this.

BE INTENSE

TAKE ACTION!

I’ve written about the value of a form for your home budget several times. I’ve also written about the value that is derived from writing down your home budget. I want to bring these two principles together:

1. Your home budget form need not be complex.
2. You must write your budget down.

I do a lot of research on the internet regarding budgeting. I try and see what people are really looking for to manage their money. This helps me market my product better, and helps me get to know my audience (I’ll take a small bow for any copywriters reading this…thank you).

What I’ve noticed over the years is the constant searching for some type of form for your home budget. People are looking for something they can use to get their finances in order. And where do finances feel the pinch the most? In your home.

But something is missing: ACTION!

What makes one form better than another? Will one method somehow spring your budgeting into action, while the other will do nothing at all? Of course not.

The form is not important. It’s your use of the form that is key.

Allow me to share my personal experience with this several years ago. While I was in high school (yes, high school) I thought it would be smart (and I was curious) to track my spending. I wanted to know exactly what I was spending all of my money on. Did I look around the internet for several hours trying to find the perfect solution? No. I took action. And created this:

Download this form

If you’ve taken the moment necessary to download the .pdf of this, you might be laughing. To quote Han Solo in Star Wars, “Laugh it up.” Because this form cut my expenses in half baby! Now I’m laughing all the way to the bank (I won’t mention the fact that I was working for $5.50 an hour at the time - they were small deposits at said bank).

Let’s go through the bitter simplicity of this home budget form. I stuck it in a binder for starters. The binder sat inside my desk drawer. At night, when I was getting ready for bed I would think to myself, “Did I spend any money today?” This usually involved digging around in my pockets for any receipts. If the answer was affirmative I would pull out the binder, open it up, and record something like this:

If the answer was negative, I would go brush my teeth.

My point of all this is to illustrate that you do not need some fancy-dancy form to get your budget under way! A piece of paper and a pencil will suffice. Heck, I didn’t even put the numbers in a spreadsheet. When the paper was filled, I would manually total it up, print out a fresh copy, and put it on top in the binder.

Now, I mentioned writing down your budget. This form does not actually allow you to do that. What it does do is put a major emphasis on your spending. My spending went from $440 every six weeks, to $215 every eight weeks. And the beauty of it all? I didn’t even feel I was depriving myself of anything. Why? Because the things I cut out were not giving me real value anyway. They were impulses.

Keep that in mind. The most powerful tip I can give you on how to manage your money is to write it down.

Now, we’ve all gotten a bit more sophisticated since I was in high school. And everyone’s a bit (lot) more in debt too. The same rules still apply. Use something simple that will get you in the habit of writing down your purchases, saving your money, and getting out of the paycheck to paycheck trap.

Regardless of what you use, begin writing down every penny you spend today!

TAKE ACTION!

Recently I gained an insight into the affluent lifestyle. Having had a baby recently, we’re still on the prowl for a rocker. I guess some people call them gliders. We want to go all out and get one that swivels, reclines, and - of course - glides. With the car having 3,420 miles since its last oil change, and the fact that it was a nice Saturday morning, I set out to buy myself some oil, ramps, and an oil pan. The ramps were $19.99, the oil pan $3.50. The filter cost $3.50 and six quarts of oil about $8. To get the oil changed at Jiffy Lube it would cost me $27. So the ramps and oil pan are a one time purchase - from here on out I save myself about $15 every 3,000 miles. I don’t make enough per hour to justify not doing the oil change myself.

At any rate, on my way home I saw a few garage sale signs, so I took a detour to one in particular in hopes of striking gold and getting my wife a rocker/glider.

It was typical garage sale stuff: dusty, stained, a few nice things here and there, and a couch that looked almost as worn as ours. There was a lady there, browsing around. Lots of people were there still setting up the displays, so it was just she and I, parousing the merchandise. She picked up old clothes, looked them over, folded them back up nicely and laid them down again. I wouldn’t have noticed her except for the fact that she didn’t look like your typical garage sale lady. Allow me to elaborate:

I was wearing my oldest pair of jeans (at least 6 years old), a shirt I won when I was 15 at an ice skating arena, a Hard Rock Cafe baseball cap, and shoes that squeak when I walk. I fit the garage sale mold. This lady, on the other hand, looked nice. Her hair was done, she had on nice-looking clothes, and looked very well kempt. She looked as if she might live the affluent lifestyle. Yet she was at a garage sale. I didn’t find what I wanted, so I headed back to the car. As I pulled away she also got into her car - a Lexus.

My suspicions were confirmed. She was affluent, well-to-do. Now, just because someone appears to be living the affluent lifestyle doesn’t mean they’re necessary affluent. For all I know Joe BigCar is up to his eyeballs in debt and is one paycheck away from bankruptcy. I feel confident, however, that she is indeed affluent. Why? Because she shops at garage sales. She recognizes the value of a dollar. She is frugal. And a Mentality of Frugality leads to financial security. I’d be willing to bet that her very nice Lexus was purchased slightly used and with cash. Welcome to the true lifestyle of the affluent. Not quite as glamorous as you thought eh?

One more thing. I love garage sales for two reasons. (1) I find bargains. (2) I practice my negotiating skills. When you’re haggling over an old sewing table (yes - I did) with an asking price of $5. It’s just great practice to go up to the guy and offer $2. (I got it for $2). So the next time I go to buy a car, I won’t be without practice when I have to go head to head against somebody who’s negotiated hundreds of times. Sure $3 at a garage sale is nothing. But $3,000 off a slightly used car? Now that’s something.

The “well-to-do” recognize that garage sales are not just gathering places for junk. They’re negotiation training grounds. Hone your skills there - then save big when you’re up to bat against the big dogs.

Everyone’s always looking for some simple ways to save money, and there are plenty of ways to do it. The fact of the matter is, saving money - by its very nature - is simple. You don’t have to explain some deep concept to someone, then whip out a powerpoint presentation to visually illustrate how saving money works. You don’t need to get a formal education to understand the vast depths of the saving-money concept. Nope, you just have to do something. And that is why it’s hard.

I ran across some simple ways to save money in an article in Fortune Magazine today. I thought I would share the basic thrust of the article.

The first thing the article mentions is the U.S. “dismal savings rate” - which stands at less than one percent. We can’t save beans. We are consumers. And we’re going to consume ourselves right into retirement poverty if we don’t give ourselves a swift kick in the pants - now.

Fortune outlined four problems and their respective solutions, regarding saving money. I will - logically - begin with the first.

PROBLEM: If you see money in your checking account, you spend it.
SOLUTION: Pay yourself first.

Here Fortune pushes the idea of automatic savings plans that can be implemented by pretty much any bank or investment institution. Basically, you tell them, “On the 5th of every month, take $100 out of XXXX account, and transfer it to my XXXX mutual fund.” And it happens. Fortune relates the story of a doctor who “regularly outspent his $200,000 salary” - but once he got on an automatic deduction plan of 5%, he said he didn’t even notice the difference.

I wouldn’t be able to sleep tonight if I also didn’t mention the power that comes from living on a budget that you have made before the month begins - where you tell the money what to do. Then once you (and your spouse if applicable) have committed to the budget, it tells you what to do.

Alright, back on track. Fortune’s idea can work for the guy making 40k also. A simple way to save money? Have it auto-deducted. THEN DON’T TOUCH IT. Just wanted to make sure that was clarified!

PROBLEM: You spend “windfall” money whenever you get it.
SOLUTION: Treat all money the same.

Now here I thought Fortune had a great idea when it came to this little problem. Let’s say you get a tax refund of $1000. You see the money as something “extra” that you normally don’t count on. So you immediately think that you can just blow the money somewhere. Now, I agree that sometimes it’s healthy and smart to blow a bit of windfall money - but with a savings rate of 1%? I just can’t justify it.

If you’re trying to get out of debt, you can’t afford to think of any extra money as windfall money. It’s debt money. It’s part of the key to your financial freedom. Fortune suggests:

Put the “found money” into a savings account for just one month and consider how to spend it later. By the time the month is up…the dough will likely feel more like savings… and you’ll be less likely to use it on a shopping spree.

Now that seems like a pretty simple way to save money. Elegantly simple. I love it.

PROBLEM: You throw good money after bad.
SOLUTION: Don’t let past decisions dictate future ones.

Fortune used the example of a couple that bought a $250,000 yacht and had three years of maintenance on the sucker before they finally decided to sell the money pit. Maybe we can scale that example back about - oh, $249,000 - What if you invest in some stupid multi-level marketing gimmick and burn $1,000 buying super guava juice made by the rain people in the deepest parts of the African Congo? (It doesn’t taste good, but man is it good for you!) You have sunk one grand into the project. Not wanting to admit your stupidity, you continue pouring your time, and even some extra money, into distributing fliers, building a website, etc. It still doesn’t produce. You should cut your losses and walk away. So another simple way to save money is to walk away from a bad deal - even after you’ve invested time or money into it. (This is not to imply that you give up trying to earn money. Notice that I said you walk away from a bad deal.)

PROBLEM: Saving money feels like depriving yourself.
SOLUTION: Visualize something concrete your savings will buy.

This is another elegantly simple way to save money. If you find you’re lacking the motivation to really sock away the requisite amount for retirement and security, practice visualizing what that savings will earn for you later in life. Can you imagine getting a check from your mutual fund holder every month for several thousand dollars? And all you did that month was visit grandkids, play golf, and volunteer at your church?

The sheer idea that my savings could work for me all the time is motivation enough to want to save. But find whatever you need to visualize that your savings will buy for you - then use that visualization to motivate yourself to save, save, save! If you need to, start small, then work up to a necessary amount of consistent savings.

Remember, how much you save and what kind of life you will live ultimately depends on you. Take the necessary steps to attain the financial security you desire.